Bitcoin War: The First Real Threat to Bitcoin?

Posted on Mar 17, 2012 by rasengan
DJ Turntable
Scumbag Bitcoin Miner

For most Bitcoiners, it is a well known fact that there is a significant risk in the decentralized peer-to-peer currency pertaining to hashing power.  In order to maintain a perfectly democratic internet currency, no one single entity should ever have control of 51%, or greater, of the total network hashing power.

Today, one of our researchers discovered that according to Blockchain.INFO, a miner at currently has approximately 15% of the total hashing power.  This, in itself, is every day news.  However, the strange or even frightening fact is that it is producing empty blocks (single transaction blocks).  If this 15% turned into 51%, it could have the potential to kill bitcoin.   Why are they doing this?  There are a few possible reasons:

1. The entity may have discovered a method for increasing mining ROI, and essentially, is earning its 50 bitcoins per block much more quickly than others.  In general when finding a block, hashes for every transaction must be computed.  When computing 1 transaction per block versus 100, you can imagine the latter would be more costly than the former.  However, this means that the entity would not receive any fees for processing transactions.  It is difficult, at the current time, to determine whether this would be beneficial.

2. The entity is willing to blow money on mining these empty blocks.  Essentially, this could lead to a complete stop in bitcoin transaction processing.  If the entity obtains 51% of hashing power and fully stops processing transactions while mining against only its own blocks, the block chain will become useless.  Some people who might do this include governments, banks, competing currencies, or ridiculously wealthy and bored individuals who have a vendetta against bitcoin.

3. This could also be a botnet that does not wish to deal with the hassle of constantly sending all of the current transaction information to its zombies.  This would be more for coding simplicity rather than for financial gain.

As of today, there is still very little risk.  Additionally, assuming this entity falls under the #1 listed above (i.e., not entirely malicious), the worst thing that will happen is that bitcoin transaction confirmations will be slowed down by whatever percent of hashing power they are “contributing,” and Jerry McGuire will yell “SHOW ME THE MONEY!”

So what is it?  Is this entity generously increasing their ROI, or is it attacking and taking over?  With the recent security advisories and, of course, the widely publicized hacks, it looks like the WWW (Wild Wild West) is in full effect.

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  1. Ɠ⊙иƶǾдҡĿдиɗ

    Am I missing something?

    I see absolutely no way to get meaningful profit out of a >50% attack. It’d be short-lived and in short order it would drive the value of BTC to zero.

    On the other hand, if you had that much of the network (or just under 50%) under your control and you just kept mining coins, wouldn’t you be making great hods of money consistently for the foreseeable future?

    Seems like the only entity that’d be motivated to try a >50% attack would be a large government, intending to destroy bitcoin forever.

    And the bigger the network gets and the bigger the market value of it gets, the more political power will exist that will want to stop that from happening.

    If you’re a government leader and you obliterate US$1.4 billion in value in an instant, you’re going to piss a lot of people off, and some of them might go crazy and try to kill you.

    If the total value of BTC hits US$100 billion, or US$1 trillion, and you’re a government leader and you authorize obliterating that value, that’s orders of magnitude more chances that some angry person who lost a lot of money is coming after you, and orders of magnitude more likelihood that one of those angry people is competent enough to get you.

    I am also curious: is there no way to alter the bitcoin infrastructure to block anybody who takes control of more than a certain % of the network?

    11 years ago
  2. Hans

    Whats the date for this article?

    11 years ago
  3. 64bit

    The hashing power it would take to achieve 51% of the network hashes isn’t a constant number, and thanks to the pump and dump of April 2013, we have alot more people interested in mining. Also one should note the ASIC releases and the hashing power they bring to the network.

    11 years ago
  4. spongecake

    Lol you guys worry too much. Do you really think the entire scene of underground computer hackers and enthusiasts will allow this to happen? They have gone up against much bigger opponents in the past, when they felt threatened or provoked. This is no different. Do you think groups that interact on IRC or come from the /b/ world are gonna let some “big banker” type come in and destroy their currency? Good luck ;)

    11 years ago